Microsoft is offering voluntary exit packages to about 60,000 employees, roughly 27% of its workforce, including staff on teams building Copilot and other AI products, as the company looks for ways to fund its AI investments.
Amy Coleman, executive vice president and chief people officer, announced the Voluntary Exit Offer (VEO) in an internal memo on Monday, which Microsoft republished on its official blog.
“This offer gives eligible employees who may be considering a future outside the company a new choice to make that transition now with support,” Coleman wrote in the memo. It also gives participating organizations “another way to adapt their workforce to changing needs,” she wrote in the blog.
The offer covers employees at level 70 and below in participating teams in the US, Canada, India, and the UK, according to the memo. “Some organizations are providing the Voluntary Exit Offer, and some are not,” Coleman wrote. She added that participation depends on each business’s “priorities, customer commitments and workforce needs.”
However, her memo did not specify how many employees are eligible for this offer. According to a Reuters report, the move will impact about 60,000 employees globally, or about a quarter of the global employee base.
Participating teams include AI experiences, Copilot, Xbox, and Windows + Devices, Reuters reported, citing a person familiar with the matter. Marketing, sales, commercial business, and security teams, along with some data center staff, are excluded, the report added.
Employees have until early December to decide, and those who accept will leave at the end of the year, the report added. The memo describes the offer as time-limited and says it includes financial support and career planning resources. However, it does not give the terms of the packages.
From retirement to exit
The VEO builds on what Microsoft “learned earlier this year through the Voluntary Retirement Program,” Coleman wrote. That program, introduced in April, was aimed at long-serving US employees.
Hood said in April that the retirement program would carry roughly $900 million in one-time costs. In July, she said its expenses had come in lower than expected.
The new offer is not tied to age or years of service, and it extends beyond the US. “The Voluntary Exit Offer is new for us. We’ll learn from it,” Coleman wrote in the blog post.
A smaller company by design
Microsoft has said its workforce will shrink this fiscal year. “We expect headcount will decrease year-over-year,” CFO Amy Hood had said on the company’s April 29 earnings call, referring to fiscal 2027, which began July 1. On the same call, she said the company was changing how it operates “to increase our pace and agility.”
Microsoft employed about 223,000 people full-time as of June 30, 2026, down from 228,000 a year earlier, according to its annual report filed with the US Securities and Exchange Commission. Hood said on the company’s July 29 earnings call that total headcount had declined 2% year over year.
AI spending and the staffing question
The workforce changes coincide with a sharp rise in AI infrastructure spending. Microsoft spent $41 billion on capital expenditures in the quarter ended June 30, Hood said on the July earnings call, and she guided to more than $50 billion for the September quarter.
Microsoft has also urged customers to rethink how they fund AI. On the April earnings call, CEO Satya Nadella said IT budgets would be reshaped by business outcomes and “reallocation from other line items on the income statement, like OpEx.”
Sanchit Vir Gogia, chief analyst at Greyhound Research, cautioned against reading Microsoft’s moves as a template.
“Microsoft’s internal AI use does not establish substitution of particular roles,” he said. He advised enterprises to measure completed work at an agreed quality level across representative roles and difficult exceptions before changing staffing, and to keep experienced staff available while doing so.
“Workforce savings earn credibility through the capability that remains,” Gogia said.
Account coverage in question
Whether customer-facing teams take part is an open question for buyers. Coleman wrote in the memo that participation varies based on each business’s “priorities, customer commitments and workforce needs.”
Microsoft’s annual report counts 89,000 employees in operations, a category that includes product support, consulting services and data center operations. Another 43,000 work in sales and marketing. Microsoft has not said whether staff in either group are eligible.
“The practical test is whether customer-critical capability remains available throughout the transition,” Gogia said. He recommended that CIOs confirm the accountable account owner and a qualified backup. They should then test the successor on an unresolved exception and compare support cases against a recent baseline.
At the same time, Microsoft is adding people to customer engagements. Nadella said on the July earnings call that the company had launched Microsoft Frontier Co., which will embed 6,000 industry and engineering experts with customers.
Gogia said delivery commitments need checking at a granular level. “Aggregate headcount does not identify the expertise required by an Azure migration or a Dynamics implementation,” he said. He advised verifying Azure dependencies by subscription and region, reconfirming Dynamics implementation specialists, and distinguishing previews from contractual milestones on product roadmaps. Microsoft did not immediately respond to a request for comment.